SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended July 2, 1995 Commission file number 1-6682
HASBRO, INC.
--------------------
(Name of Registrant)
Rhode Island O5-0155090
- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1027 Newport Avenue, Pawtucket, Rhode Island 02861
---------------------------------------------------
(Principal Executive Offices)
(401) 431-8697
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X or No
--- ---
The number of shares of Common Stock, par value $.50 per share,
outstanding as of August 11, 1995 was 87,782,900.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands of Dollars Except Share Data) (Unaudited)
Jul. 2, Jun. 26, Dec. 25,
Assets 1995 1994 1994
-------- -------- --------
Current assets
Cash and cash equivalents $ 86,213 46,427 137,028
Accounts receivable, less allowance
for doubtful accounts of $45,800,
$53,500 and $51,000 654,216 635,893 717,890
Inventories:
Finished products 272,182 271,620 181,202
Work in process 29,987 22,549 19,342
Raw materials 61,873 44,275 43,863
--------- --------- ---------
Total inventories 364,042 338,444 244,407
Deferred income taxes 81,173 89,356 83,730
Prepaid expenses 79,920 63,719 69,408
--------- --------- ---------
Total current assets 1,265,564 1,173,839 1,252,463
Property, plant and equipment, net 309,571 292,794 308,879
--------- --------- ---------
Other assets
Cost in excess of acquired net assets,
less accumulated amortization of
$91,499, $75,461 and $82,949 486,034 469,384 479,960
Other intangibles, less accumulated
amortization of $68,363, $94,803 and
$58,178 351,852 175,793 295,333
Other 46,747 55,332 41,740
--------- --------- ---------
Total other assets 884,633 700,509 817,033
--------- --------- ---------
Total assets $2,459,768 2,167,142 2,378,375
========= ========= =========
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
(Thousands of Dollars Except Share Data) (Unaudited)
Jul. 2, Jun. 26, Dec. 25,
Liabilities and Shareholders' Equity 1995 1994 1994
-------- -------- --------
Current liabilities
Short-term borrowings $ 353,051 129,488 81,805
Current installments of long-term debt - 3,214 10
Trade payables 115,321 105,249 165,368
Accrued liabilities 314,563 297,094 417,763
Income taxes 57,905 67,425 98,786
--------- --------- ---------
Total current liabilities 840,840 602,470 763,732
Long-term debt, excluding current
installments 149,993 200,458 150,000
Deferred liabilities 66,292 70,946 69,226
--------- --------- ---------
Total liabilities 1,057,125 873,874 982,958
--------- --------- ---------
Shareholders' equity
Preference stock of $2.50 par
value. Authorized 5,000,000
shares; none issued - - -
Common stock of $.50 par value.
Authorized 300,000,000 shares; issued
88,086,040, 88,081,902 and 88,085,802 44,043 44,041 44,043
Additional paid-in capital 279,933 292,455 282,151
Retained earnings 1,064,150 932,690 1,071,416
Cumulative translation adjustments 24,464 27,933 14,526
Treasury stock, at cost, 335,435,
134,400 and 557,455 shares (9,947) (3,851) (16,719)
--------- --------- ---------
Total shareholders' equity 1,402,643 1,293,268 1,395,417
--------- --------- ---------
Total liabilities and
shareholders' equity $2,459,768 2,167,142 2,378,375
========= ========= =========
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(Thousands of Dollars Except Share Data) (Unaudited)
Quarter Ended Six Months Ended
------------------- --------------------
Jul. 2, Jun. 26, Jul. 2, Jun. 26,
1995 1994 1995 1994
-------- -------- --------- ---------
Net revenues $481,854 444,324 1,008,357 933,457
Cost of sales 214,085 203,178 446,657 411,378
------- ------- --------- ---------
Gross profit 267,769 241,146 561,700 522,079
------- ------- --------- ---------
Expenses
Amortization 9,725 8,805 18,968 17,598
Royalties, research and
development 62,085 55,102 117,169 105,422
Discontinued development
project 31,100 - 31,100 -
Advertising 68,164 60,428 138,397 124,987
Selling, distribution and
administration 119,005 109,980 239,808 220,270
------- ------- --------- ---------
Total expenses 290,079 234,315 545,442 468,277
------- ------- --------- ---------
Operating profit (loss) (22,310) 6,831 16,258 53,802
------- ------- --------- ---------
Nonoperating (income) expense
Interest expense 7,384 4,609 13,207 10,045
Other (income), net (5,477) (435) (7,989) (2,343)
------- ------- --------- ---------
Total nonoperating expense 1,907 4,174 5,218 7,702
------- ------- --------- ---------
Earnings (loss) before income
taxes and cumulative effect of
change in accounting principles (24,217) 2,657 11,040 46,100
Income taxes (9,324) 1,023 4,250 17,749
------- ------- --------- ---------
Net earnings (loss) before
cumulative effect of change in
accounting principles (14,893) 1,634 6,790 28,351
Cumulative effect of change in
accounting principles - - - (4,282)
------- ------- --------- ---------
Net earnings (loss) $(14,893) 1,634 6,790 24,069
======= ======= ========= =========
Per common share
Net earnings (loss) before
cumulative effect of change
in accounting principles $ (.17) .02 .08 .32
======= ======= ========= =========
Net earnings (loss) $ (.17) .02 .08 .27
======= ======= ========= =========
Cash dividends declared $ .08 .07 .16 .14
======= ======= ========= =========
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended July 2, 1995 and June 26, 1994
(Thousands of Dollars) (Unaudited)
1995 1994
---- ----
Cash flows from operating activities
Net earnings $ 6,790 24,069
Adjustments to reconcile net earnings to net cash
utilized by operating activities:
Depreciation and amortization of plant and equipment 40,415 35,529
Other amortization 18,968 17,598
Deferred income taxes (3,521) (13,241)
Change in operating assets and liabilities (other
than cash and cash equivalents):
Decrease in accounts receivable 79,057 90,098
(Increase) in inventories (108,054) (82,645)
(Increase) decrease in prepaid expenses (8,323) 3,193
(Decrease) in trade payables and accrued
liabilities (208,513) (219,678)
Other 12,016 1,475
------- -------
Net cash utilized by operating activities (171,165) (143,602)
------- -------
Cash flows from investing activities
Additions to property, plant and equipment (38,752) (45,825)
Acquisitions, net of cash acquired (102,413) -
Other 2,215 1,114
------- -------
Net cash utilized by investing activities (138,950) (44,711)
------- -------
Cash flows from financing activities
Net proceeds from short-term borrowings of 90 days
or less 76,332 63,944
Proceeds from short-term borrowings in excess of
90 days 185,000 -
Repayment of long-term debt (10) (74)
Stock option and warrant transactions 4,866 (4,225)
Purchase of common stock (312) (3,851)
Dividends paid (13,147) (11,434)
------- -------
Net cash provided by financing activities 252,729 44,360
------- -------
Effect of exchange rate changes on cash 6,571 4,126
------- -------
Decrease in cash and cash equivalents (50,815) (139,827)
Cash and cash equivalents at beginning of year 137,028 186,254
------- -------
Cash and cash equivalents at end of period $ 86,213 46,427
======= =======
Supplemental information
Cash paid during the period for:
Interest $ 10,279 10,958
Income taxes $ 45,982 43,361
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars) (Unaudited)
(1) In the opinion of management and subject to year-end audit, the
accompanying unaudited interim financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the financial position of the Company as of July 2, 1995 and June 26, 1994,
and the results of operations and cash flows for the periods then ended.
The six months ended July 2, 1995 consisted of 27 weeks while the six
months ended June 26, 1994 consisted of 26 weeks.
The results of operations for the six months ended July 2, 1995, are not
necessarily indicative of results to be expected for the full year.
(2) During the second quarter, the Company discontinued its efforts, begun
in
1992, related to the development of a mass-market virtual reality game
system. These efforts produced such a game system, but at a price judged to
be too expensive for the mass-market. The impact of this decision on the
quarter was a charge of $31,100. (See further discussion in Management's
Discussion and Analysis of Financial Condition and Results of Operations.)
(3) Earnings per common share are based on the weighted average number of
shares of common stock and dilutive common stock equivalents outstanding
during each period. Common stock equivalents include stock options and
warrants for the period prior to their exercise. Under the treasury stock
method, the unexercised options and warrants were assumed to be exercised
at the beginning of the period or at issuance, if later. The assumed
proceeds were then used to purchase common stock at the average market
price during the period.
For each of the reported periods the difference between primary and fully
diluted earnings per share was not significant.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(Thousands of dollars)
NET REVENUES
- ------------
Net revenues for the second quarter and six months of 1995 were $481,854
and $1,008,357, respectively, up approximately 8% in each period from the
$444,324 and $933,457 reported for the same periods of 1994. Reflecting
local currency growth in their major markets, the U.K., France, Italy and
Spain, as well as the impact of acquisitions made in the second half of
1994, the European units achieved revenue growth of almost 14% in constant
dollars. The effect of the weakened U.S. dollar added approximately
$15,000, resulting in a total European growth of 26% for the quarter.
Domestically, the Company's revenues were also favorably impacted by the
second-half 1994 and early 1995 acquisitions. The Hasbro Games Group,
showing growth in many of their classic products, a positive acceptance
from new products as well as benefiting from one of these 1994
acquisitions, reported significant revenue growth, up more than 21%.
COST OF SALES
- -------------
The gross profit margin, expressed as a percentage of net revenues, for the
quarter increased to 55.6% from the 1994 level of 54.3%, while marginally
decreasing for the six months to 55.7% from 55.9% a year ago. The
improvement for the quarter reflects the more favorable mix of products
sold in 1995, which more than offset cost increases from a year ago. The
difference for the six months can largely be attributed to the impact of
increased product costs and the higher volume of preschool products sold
during the first quarter.
EXPENSES
- --------
Royalties, research and development expenses for the quarter increased both
in amount and as a percentage of net revenues from prior year levels. The
royalty component increased in amount and when expressed as a percentage of
net revenues. In addition to reflecting the 8% growth in volume during the
quarter, the increases can also be attributed to the mix of products sold
with more revenue being derived from items carrying higher than traditional
royalty rates. Research and development was $34,864 and $67,428 for the
quarter and six months of 1995 while $32,959 and $61,462 for the same
periods of 1994. Included in the 1995 amounts are $2,300 for the second
quarter and $5,300 for the six months relating to efforts to develop a
mass-market virtual reality game system as discussed below. Amounts for the
comparable periods of 1994 were $3,800 and $6,800.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
During the second quarter, the Company discontinued its efforts, begun in
1992, related to the development of a mass-market virtual reality game
system. These efforts produced such a game system, but at a price judged to
be too expensive for the mass-market. The impact of this decision on the
quarter was a charge of $31,100, the estimated costs associated with such
action. Approximately half of the charge resulted from the expensing of
software development costs related to both the operating system and games
for the system. These costs were previously capitalized under the
provisions of Statement of Financial Accounting Standards No. 86. The
remaining amount represents provisions for costs associated with
discontinuing this project, including the termination of contractual
agreements relating to the development of the system and games, the write-
off of certain fixed assets and various other cancellation/termination
costs.
Advertising expense in the current quarter increased both in amount and as
a percentage of net revenues. For the second quarter and six months of
1995, the amounts were $68,164 and $138,397, respectively, compared with
$60,428 and $124,987 in the same periods of 1994. Expressed as a percentage
of net revenues, 1995 was 14.1% and 13.7% while 1994 was 13.6% and 13.4%.
The increases during the current year reflect the higher proportion of the
Company's revenues coming from the international marketing units which
generally have higher advertising to sales ratios than do the domestic
groups.
For the quarter, selling distribution and administration expense increased
from the level of the comparable period of 1994. This increase was the
result of a combination of factors including the impact of the weakened
U.S. dollar, new organizations, principally Larami, Waddington Games,
Scandinavia and the K'NEX joint venture, higher distribution costs
attributable to the higher sales volume and a general increase in expense
levels. The six month increase is primarily attributable to the same
factors, augmented by the impact of the additional week included in the
first quarter of 1995.
NONOPERATING (INCOME) EXPENSE
- -----------------------------
Interest expense for the second quarter, reflecting the impact of higher
interest rates and the utilization of approximately $400,000 of working
capital for acquisitions and investments, warrant and share repurchases and
the reduction of long-term debt during the most recent twelve months,
increased by $2,800 from the 1994 level. The six month increase can also be
attributed to the same factors.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
Other income, net, increased significantly for the quarter reflecting both
the impact of foreign currency transaction gains and increased earnings
from available funds, principally in the international units, invested on a
short-term basis locally. (See Liquidity and Capital Resources later in
this document for further discussion related to short-term investments.)
OTHER INFORMATION
- -----------------
The business of the Company is characterized by customer order patterns
which vary from year to year largely because of differences in the degree
of consumer acceptance of a product line, product availability, marketing
strategies and inventory levels of retailers and differences in overall
economic conditions. Also, quick response inventory management practices
now being used results in fewer orders being placed in advance of shipment
and more orders, when placed, for immediate delivery. As a result,
comparisons of unshipped orders on any date in a given year with those at
the same date in a prior year are not necessarily indicative of sales for
the entire year. In addition, it is a general industry practice that orders
are subject to amendment or cancellation by customers prior to shipment.
The Company's unshipped orders were approximately $950,000 at July 30,
1995, compared to $850,000 at July 24, 1994. The revenue pattern of the
Company continues to shift with the second half of the year growing in
significance to its overall business and within that half the fourth
quarter becoming much more prominent. The Company expects that this trend
will continue.
During the fourth quarter of 1993, the Company recorded a restructuring
charge of $15,500, primarily relating to the planned closure of the
Company's manufacturing facility in The Netherlands. The Company had
initially planned to cease production at this facility during the second
quarter of 1994 but was unable to do so. The actions necessary to comply
with local regulations relating to such a closure took longer than
anticipated and the Company did not cease production at this facility until
the first quarter of 1995. A majority of the liability established for this
closure has now been satisfied and the Company has begun to experience the
positive results from this action including both the elimination of costs
associated with the previously existing excess production capacity and the
transfer of production to a lower-cost manufacturing facility. The
remaining amount provided in 1993 related to several items, none of which
were significant, either in cost or anticipated benefits. All of the
liabilities established for such items have been satisfied and the expected
benefits are being obtained.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
During the third quarter of 1994, the Company recorded a restructuring
charge of $12,500, primarily to cover costs associated with the
restructuring of certain of its domestic operations. Included in such
amount was a provision of approximately $4,400 for the costs associated
with the termination of approximately 100 management employees.
Substantially all of these employees have been terminated and a majority of
the liability has been satisfied. Also part of this charge was a provision
of approximately $3,400 for costs associated with the termination of
approximately 485 domestic manufacturing employees. Substantially all of
these employees have also been terminated and a majority of the liability
has been satisfied. The Company believes that the reorganized units are
operating more efficiently and thus the anticipated savings, although
impractical to quantify, are being experienced.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Because of the seasonality of the Company's business coupled with certain
customer incentives, mainly in the form of extended payment terms, the
interim cash flow statements are not representative of that which may be
expected for the full year. As a result of these extended payment terms,
the majority of the Company's cash collections occur late in the fourth
quarter and early in the first quarter of the subsequent year. While a
large portion of these receivables is of a quality which would allow their
sale, alleviating the need for much of its interim financing, the Company
believes it to be more cost effective to use its available funds and short-
term borrowings to finance them. Late in its fourth quarter and through the
first quarter of the subsequent year, as receivables are collected, cash
flow from operations becomes positive and is used to repay a significant
portion of the short-term borrowings.
As a result, management believes that on an interim basis, rather than
discussing its cash flows, a better understanding of its liquidity and
capital resources can be obtained through a discussion of the various
balance sheet categories. Also, as several of the major categories,
including cash and cash equivalents, accounts receivable, inventories and
short-term borrowings, fluctuate significantly from quarter to quarter,
again due to the seasonality of its business and the extended payment terms
offered, management believes that a comparison to the comparable period in
the prior year is generally more meaningful than a comparison to the prior
year-end.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
Cash and cash equivalents at July 2, 1995, were almost double their 1994
level. While the Company attempts to keep its cash and cash equivalents at
the lowest level possible whenever it has short-term borrowings, at times
the cash available and the borrowing requirement may be in different
countries and currencies which may make it impractical to substitute one
for the other. Receivables were approximately $20,000 greater than at the
same time in 1994, with more than two-thirds of the increase attributable
to changed foreign currency translation rates. Inventories, at $364,042
were approximately $25,000 higher than those of a year ago reflecting the
impact of the Company's new operations as well as that of the weakened U.S.
dollar. Other assets, as a group, increased by approximately $185,000 from
their level a year ago. This increase reflects the Company's investments
and acquisitions during the most recent twelve months, partially offset by
the disposition of certain investments, as described in Management's
Discussion and Analysis of Financial Condition and Results of Operations in
the Company's Annual Report on Form 10-K for the year ended December 25,
1994, and twelve additional months of amortization expense.
Short-term borrowings, at $353,051 were approximately $225,000 greater than
last year. This increase is the net effect of the cash required for the
Company's recent investments and acquisitions, the early redemption of
$50,000 of its long-term debt, the election to pay cash rather than issuing
additional shares to exercising holders of its warrants, which expired on
July 12, 1994, and the repurchase of shares of the Company's common stock,
all partially offset by funds generated from operations within the most
recent twelve months. Other current liabilities increased approximately 3%
reflecting both the Company's increased activities and the impact of
changed foreign currency translation rates.
At July 2, 1995, the Company had committed unsecured lines of credit
totaling approximately $600,000 available to it. It also had available
uncommitted lines approximating $1,050,000. The Company believes that these
amounts are adequate for its needs. Of these available lines, approximately
$375,000 was in use at July 2, 1995.
PART II. Other Information
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's Annual Meeting of Shareholders held on May
10, 1995, the Company's Shareholders, by a vote of 69,811,908
for, 6,116,974 against, 681,468 abstentions and no broker
nonvotes, approved the Hasbro, Inc. Stock Incentive Performance
Plan.
In addition, they reelected the following persons to the Board
of Directors of the Company: Barry J. Alperin (76,462,143 votes
for, 148,207 votes withheld); Alan R. Batkin (76,447,327 votes
for, 163,023 votes withheld); Claudine B. Malone (76,462,359
votes for, 147,991 votes withheld); Carl Spielvogel (74,190,912
votes for, 2,419,438 votes withheld); and Henry Taub (74,177,318
votes for, 2,433,032 votes withheld). They also elected the
following two new Directors; Morris W. Offit (76,455,655 votes
for, 154,695 votes withheld); and Paul Wolfowitz (76,457,571
votes for, 152,779 votes withheld). There were no votes against
any nominee and no broker nonvotes.
Finally, the Company's Shareholders ratified the selection of
KPMG Peat Marwick as the independent public accountants for the
Company for the 1995 fiscal year by a vote of 76,501,156 for,
40,194 against, 69,000 abstentions and no broker nonvotes.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
11.1 Computation of Earnings Per Common Share - Six Months
Ended July 2, 1995 and June 26, 1994.
11.2 Computation of Earnings Per Common Share - Quarter
Ended July 2, 1995 and June 26, 1994.
12 Computation of Ratio of Earnings to Fixed Charges -
Six Months and Quarter Ended July 2, 1995.
27 Article 5 Financial Data Schedule - Second Quarter 1995
(b) Reports on Form 8-K
A Current Report on Form 8-K, dated July 19, 1995, was filed by
the Company and included the Press Release dated July 19, 1995,
announcing that the Company was discontinuing its efforts to
develop a mass-market virtual reality game system and
discussing the Company's revenue and earnings expectations for
the current quarter.
A Current Report on Form 8-K, dated July 24, 1995, was filed by
the Company and included the Press Release dated July 24, 1995,
announcing the Company's results for the current quarter.
Consolidated Statements of Earnings (without notes) for the
quarters and six months ended July 2, 1995 and June 26, 1994
and Consolidated Condensed Balance Sheets (without notes) as
of said dates were also filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HASBRO, INC.
------------
(Registrant)
Date: August 16, 1995 By: /s/ John T. O'Neill
---------------------
John T. O'Neill
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
HASBRO, INC. AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the Period Ended July 2, 1995
Exhibit Index
Exhibit
No. Exhibits
- ------- --------
11.1 Computation of Earnings Per Common Share -
Six Months Ended July 2, 1995 and June 26, 1994
11.2 Computation of Earnings Per Common Share -
Quarter Ended July 2, 1995 and June 26, 1994
12 Computation of Ratio of Earnings to Fixed
Charges - Six Months and Quarter Ended July 2, 1995
27 Article 5 Financial Data Schedule - Second Quarter 199
EXHIBIT 11.1
HASBRO, INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
Six Months Ended July 2, 1995 and June 26, 1994
(Thousands of Dollars and Shares Except Per Share Data)
1995 1994
----------------- -----------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Net earnings before cumulative
effect of change in accounting
principles $ 6,790 6,790 28,351 28,351
Interest and amortization on 6%
convertible notes, net of taxes (a) - - - -
------- ------- ------- -------
Net earnings before cumulative
effect of change in accounting
principles applicable to common
shares 6,790 6,790 28,351 28,351
Cumulative effect of change in
accounting principles - - (4,282) (4,282)
------- ------- ------- -------
Net earnings applicable to
common shares $ 6,790 6,790 24,069 24,069
======= ======= ======= =======
Weighted average number of shares
outstanding:(b)
Outstanding at beginning of
period 87,528 87,528 87,795 87,795
Actual exercise of stock
options and warrants 122 122 168 168
Assumed exercise of stock
options and warrants 619 726 2,008 2,008
Assumed conversion of 6%
convertible notes (a) - - - -
Purchase of common stock (6) (6) (3) (3)
------- ------- ------- -------
Total 88,263 88,370 89,968 89,968
======= ======= ======= =======
Per common share:
Earnings before cumulative
effect of change in
accounting principles $ .08 .08 .32 .32
Cumulative effect of change
in accounting principles - - (.05) (.05)
------- ------- ------- -------
Net earnings $ .08 .08 .27 .27
======= ======= ======= =======
(a) The effect of these notes is antidilutive and as such is not included.
(b) Computation to arrive at the average number is a weighted average
computation.
EXHIBIT 11.2
HASBRO, INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
Quarter Ended July 2, 1995 and June 26, 1994
(Thousands of Dollars and Shares Except Per Share Data)
1995 1994
----------------- -----------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Net earnings (loss) before
cumulative effect of change in
accounting principles $(14,893) (14,893) 1,634 1,634
Interest and amortization on 6%
convertible notes, net of taxes (a) - - - -
------- ------- ------- -------
Net earnings (loss) before
cumulative effect of change in
accounting principles applicable
to common shares (14,893) (14,893) 1,634 1,634
Cumulative effect of change in
accounting principles - - - -
------- ------- ------- -------
Net earnings (loss) applicable to
common shares $(14,893) (14,893) 1,634 1,634
======= ======= ======= =======
Weighted average number of shares
outstanding:(b)
Outstanding at beginning of
period 87,635 87,635 87,981 87,981
Actual exercise of stock
options and warrants 84 84 63 63
Assumed exercise of stock
options and warrants - - 1,798 1,798
Assumed conversion of 6%
convertible notes (a) - - - -
Purchase of common stock - - (6) (6)
------- ------- ------- -------
Total 87,719 87,719 89,836 89,836
======= ======= ======= =======
Per common share:
Earnings (loss) before
cumulative effect of change
in accounting principles $ (.17) (.17) .02 .02
Cumulative effect of change
in accounting principles - - - -
------- ------- ------- -------
Net earnings (loss) $ (.17) (.17) .02 .02
======= ======= ======= =======
(a) The effect of these notes is antidilutive and as such is not included.
(b) Computation to arrive at the average number is a weighted average
computation.
EXHIBIT 12
HASBRO, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
Six Months and Quarter Ended July 2, 1995
(Thousands of Dollars)
Six
Months Quarter
------- -------
Earnings available for fixed charges:
Net earnings (loss) $ 6,790 (14,893)
Add:
Fixed charges 20,015 10,844
Income taxes 4,250 (9,324)
------- -------
Total $ 31,055 (13,373)
======= =======
Fixed Charges:
Interest on long-term debt $ 4,683 2,193
Other interest charges 8,524 5,191
Amortization of debt expense 170 85
Rental expense representative
of interest factor 6,638 3,375
------- -------
Total $ 20,015 10,844
======= =======
Ratio of earnings to fixed charges (a) 1.55 -
======= =======
(a) During the second quarter, the Company recorded a $31,100 pretax charge
related to the discontinuance of efforts to develop a mass-market
virtual reality game system. As a result, second quarter earnings were
inadequate by $24,217 to cover fixed charges.
5
6-MOS
DEC-31-1995
JUL-02-1995
86,213
0
700,016
45,800
364,042
1,265,564
620,729
311,158
2,459,768
840,840
149,993
44,043
0
0
1,358,600
2,459,768
1,008,357
1,008,357
446,657
547,571
(7,989)
(2,129)
13,207
11,040
4,250
6,790
0
0
0
6,790
.08
.08
